EBay Gets Hit By France's Handbag

There's an old joke about the French surrendering to anyone and anything, but one place France never surrenders is in the courtroom where money is involved. If you're a foreign firm doing business in France and your business model rubs an established French business the wrong way, the French court system isn't shy about whacking you with the big stick. EBay is the latest company to take a beating in Paris. They've been ordered to pay LVMH, the maker of luxury brand goods like Louis Vuitton and Christian Dior, $61 million dollars for allowing counterfeit copies to be sold on EBay's auction site. C'est la vie? Non! Cest la guerre!

EBay says it will appeal the French court's decision, which challenges a core tenet of its business—namely, that sellers and buyers who use eBay are ultimately responsible for the transactions. "We are going to fight this decision because it is totally ridiculous," says Alexandre Menais, the attorney in charge of eBay's partnerships with rights owners. In the past, eBay has argued it should be treated similarly to other sites, such as Google's (GOOG) YouTube, that let users upload content. In the U.S., such sites are not legally bound to proactively screen for and remove illegally uploaded content, such as copyrighted material—though they must take it down once alerted to its presence by the rights holder.

Alexandre should buy a newspaper. Google is getting sued for a billion dollars by Viacom for copyright infringement. No wonder EBay lost, with their lawyers making arguments like that. And he's defending a trademark infringement, not a copyright infringement, so he's really confused. The real people hurt here by the decision -- besides EBay and the counterfeiters -- are people who are not selling counterfeit goods on the service, but are simply trying to use EBay for its original purpose: unloading unwanted consumer goods. EBay will likely have to ban all sales of LVMH and similar goods, including legally owned brand-name sales. Maybe EBay shouldn't have purchased their legal team on Overstock.com.